As India sets election dates, traders brace for stock rally

The election commission has set April 7 as the start of parliamentary elections, with voting to be held in nine staggered phases until May 12. If history is any guide, investors should be very much looking forward to it.

The benchmark BSE Sensex has gained in the month before elections in each of the previous six elections, with the biggest advance coming in 2009 when the Congress-led United Progressive Alliance won a majority.

The gains in the run-up to elections can be explained by a mix of expectations for policy reforms and election spending, according to traders.

Traders expect especially strong gains this year as solid foreign investor flows, a more stable rupee on the back of a narrowing current account deficit are more than offsetting global uncertainties such as the U.S. Federal Reserve's tapering of its monthly bond buying.

Still, although markets widely expect a victory for the main opposition party BJP , whether it can clinch a majority could be the joker in the pack, although similar uncertainties about outcomes in previous elections have not prevented gains.

"A pre-election rally is definitely underway. Flows, positioning, macro are all pointing towards its extension in the coming months," said G. Chokkalingam, founder of Equinomics, a research and fund advisory company.

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Lower listings rate is proof that the Indian market is maturing

    The bullishness on Dalal Street notwithstanding, the pace at which new companies are being listed on Indian stock exchanges is declining.

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Kumar Jain

Building great cities (and nations)

Fifteen to twenty years’ span is the time when humans ...

Rajgopal Nidamboor

The essence of amplified action

It is something that ‘separates’ us from other living creatures. ...

Shona Adhikari

All roads lead to Delhi, as it gears up for art fair

With the seventh edition of India Art Fair (IAF) coming ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture